Multinational Corporations (Mncs) In The Global Economy

1672 Words4 Pages
bulb-icon

Recommended: The importance of multinational corporations

I. Introduction
Multinational Corporations (MNCs) in the global economy in this globalization era in which we live in now, has become the most important actors in doing international businesses, foreign investments, and world trades. MNCs also plays an important role in determining the diplomatic relations between states. The activities of MNCs play important roles in supporting economic globalization. The elements of business activities are also being considered in the MNCs. The MNCs in doing international business and world trades also have a strong relation with Foreign Direct Investment (FDI). There are also some arguments about the political involvement of MNCs in foreign countries whether it is appropriate to be done or not. In this paper …show more content…

II. Content
Multinational Corporations (MNCs) can be defined as a business organization in which the production activities, the distribution facilities, and the other assets are located at least in more than one country. The activities of MNCs also play important roles in supporting economic in this globalization era. In this current globalization trends, it can be accounted for by developed economies integrating with developing economies by means of Foreign Direct Investment (FDI), the reduction of trade barriers, and also the other economic reforms. Economic globalization can be referred as the …show more content…

References
Arezki, Rabah, Gregoire Rota-Graziosi, and Lemma W. Senbet. "Capital Flight Risk." Finance and Development 5, no. 3 (September 2013), 1-3. Accessed December 10, 2016. http://www.imf.org/external/pubs/ft/fandd/2013/09/pdf/Arezki.pdf.
Boundless. "Multinational Corporations." Boundless. Last modified August 8, 2016. https://www.boundless.com/sociology/textbooks/boundless-sociology-textbook/global-stratification-and-inequality-8/stratification-in-the-world-system-69/multinational-corporations-407-3428/.
Lapko, Krystsina. "The Role of Transnational Corporations in the World Economy." LinkedIn. Last modified January 20, 2015. https://www.linkedin.com/pulse/role-transnational-corporations-world-economy-krystsina-lapko.
The Economist. "The Role of Multinational Corporations in Integrating the World’s Economies." The Economist. Last modified November 20, 1997. http://www.economist.com/node/106613.
"Value Definition." Investopedia. Accessed December 12, 2016. http://www.investopedia.com/terms/v/value.asp.
"What is a Multinational Corporation (MNC)? Definition and Meaning." BusinessDictionary.com. Accessed December 10, 2016.

Show More
Related

  • It Is Unethical To Pay Cheap Wages In Developing Countries

    333 Words  | 1 Pages

    With the continuous development and progress of society, globalization gradually becomes the main trend toward the development within the company. Therefore, correct understanding of a multinational company becomes extremely important. This research will introduce a multinational company in accordance with the three thesis from the perspective of comprehensively and objectively. It is helpful to understand multinational companies

    Read More

  • Economic Globazation-Source Analysis

    778 Words  | 2 Pages

    Source one is an excerpt from the book called “Transnational Corporations: Knitting the world together”. This book was published in 2004 and the author is Keith Suter, a futurist. He believes that transnational corporations are now the main global economic force as they eroded the national market. He deems that due to transnational companies the world is now involved in one global market. He views transnational companies as a definite source of economic globalization. Transnational companies did not only bring jobs to less developed country but it also stimulated the economy of that country giving them motivation. Transnational companies had given less developed country a better quality of life and well-being. There are some critics about transnational companies but transnational company had given us a way to make our world more globally connected as what Keith Suter would agree upon.

    Read More

  • Analysis Of Theodore Levitt The Globalization Of Markets

    1168 Words  | 3 Pages

    Today, many companies enter the global market, and some companies have become extremely successful in the global marketplace and others still struggling. In Theodore Levitt’s article “The Globalization of Markets”, he states that a well managed corporation focuses on selling standardized products with high quality and low priced instead of focuses on selling on customized products with high cost. Levitt defines the differences between multinational corporation and global corporation, and adopts many specific examples to proves his view. He defines the multinational corporation who operates in many countries and adjust its product based on the taste of specific region. This will result in a high cost to produce the product because company have to input more resource into each individual product. However, global corporation sells similar product worldwide at relative low cost. According to Levitt, the cultural differences are becoming more and more “homogenized”; therefore, becoming a global corporation will lead to the successful of the company in the global market.

    Read More

  • Critical Review of Peter Dickens' Global Shift: Mapping The Changing Contours of the World Economy

    1167 Words  | 3 Pages

    Throughout the chapters assigned, Dicken focuses on the patterns and processes of global shifts, on the forms produced by the globalization of economic activities and on the forces producing those forms. He builds his arguments around three interconnected processes, which in his view are the reasons for reshaping the global economic map. Those are Transnational Corporations (“TNC”), States, and Technology.

    Read More

  • Transnational Corporation (TNC) Networks

    1617 Words  | 4 Pages

    The term Transnational Corporation (TNC), as its name suggests, is a reference to a firm whose influence is not limited to a single nation. “A transnational corporation is a firm that has the power to coordinate and control operations in more than one country” (Dicken, 2011, p. 110). This influence can take many forms, such as subsidiaries or production facilities in other countries, but ownership is not mandatory for a corporation to have sway in another country. A TNC can gain power in a country other than its home through connections to suppliers or through the act of outsourcing (Stevis, Transnational Corporations, 2013). These connections also hint at an idea, suggested by Dicken, that in many ways TNCs are “Networks within Networks.”

    Read More

  • The Huawei Company and International Business

    2743 Words  | 6 Pages

    Multinational enterprise (MNE) is “a company that is headquartered in one country but has operations in one or more other countries” (Rugman and Collinson 2012, p.38) that has at least one office in different countries but centralised home office. These offices coordinate global management in the context of international business. MNEs have increasingly essential influence on the development of the global economy and coordinate with other companies in different business environments. However, there are many issues involved with how MNEs operate well overseas, especially in emerging markets (EMs) (Cavusgil et al., 2013, p.5).

    Read More

  • Exhange Risk Faced by Multinational Corporations (MNCs)

    1553 Words  | 4 Pages

    Other types of exchange rate risks are translation risk and so-called hidden risk. The translation risk relates to cases where large multinational companies have subsidiaries in other countries. On the financial statement of the whole group, the company may have to translate the assets and liabilities from foreign accounts into the group statement. The translation will involve foreign exchange exposure. The term hidden risk evolves around the fact that all companies are subject to exchange rate risks, even if they don’t do business with companies using other currencies. A company that is buying supplies from a local manufacturer might be affected of fluctuating foreign exchange rates if the local manufacturer is doing business with overseas companies. If a manufacturer goes out of business, or experience heavy losses, it will affect all the companies it does business with. The co...

    Read More

  • Technology Contribution of MNCs To Developing Countries

    1734 Words  | 4 Pages

    In recent economic climate the link between technology transfers and Foreign Direct Investment seems to be essential for the Multinational Corporations. The main objective of MNCs is to maximize its profits. This requires them to produce the goods and services at the lowest possible cost (fixed and variable) by exploiting the resources of the developing countries apart from their home country (Pool and Stamos 1990). The channels of international technology transfer and their importance of growth have been studies extensively in 1990s. The study identifies three principal channels of international technology spillovers. The first is the direct transfer of technology via international licensing agreement (Eaton and Kortum 1996) on the contrary this source is considered less prominent as most valuable technologies are not available on license (World Investment Report 2000). The second is FDI from developed countries to developing countries as it is considered the cheapest and most reliable technique as a spillover (Blomström and Kokko 1997). The third is technology transfer through international trade where import and export of intermediate goods and capital products are exchanged (Markusen 1989, Clerides, Lach and Tybout 1997). On the other hand, it is seen that MNCs do not encourage spillovers due to (a) transmission of technology to their subsidiaries abroad. (b) Technologies that does not support the host country’s environment. (c) Maintain a control over the technology by reducing the spillovers and encouraging import. (d) Maintaining advanced technology than developing countries through Intellectual Property Rights (Aitken and Harrison et al. 1999). As an emerging economy, India has a huge presence of multinational corporations...

    Read More

  • Multinational Corporation Advantages And Disadvantages

    953 Words  | 2 Pages

    Multinational Corporation (MNC) is a corporation that has asset in other country other than its local country. It is sometimes called international corporation, a transnational or stateless corporation. Some companies also have their factories and offices worldwide. Multinational Corporation began to evolve since the nineteen century with American and European countries. According to Hymer, the multinational corporation was based on the perspective of the American. In the nineteen century, American developed many city that called multi-city and used manufacturing strategy plus wide marketing. After that, these companies were considered as multinational

    Read More

  • The Impacts ofTransnational Corporations on Less Developed Countries

    2507 Words  | 6 Pages

    The issue of the impacts transnational corporations have on less developed countries has been a controversial and much disputed subject within the field of economics and development studies. Researchers using various models such as the Rostow Development model, Harrod Domar model and the Neoclassical Theory Model, have studied these impacts and have tried to come to a conclusion to this issue. Researchers have also conducted many case studies in order to investigate in depth factors contributing to impacts and whether there are differences due to external factors. The issue has grown in importance over the last decade and this paper attempts to discover whether the impacts are beneficial enough in order to uphold transnational corporation activities in less developed countries. The first section is a literature review, which will consist of a brief clarification of economic development and explain different economic development theories, which will help, evaluate whether activities by transnational corporations help accelerate economic development in LDCs. It will also consist of different scholars definitions of outsourcing, networking and linkages further evaluating the costs and benefits of these activities by transactional corporations. The analysis section will consist of a case study of Nigerian offshore drilling. This case study gives a more depth analysis of the negative impacts TNCs can have on LDCs. Transnational companies are contributing to economic development, showing positive and negative impacts transnational corporations have on host countries through real case studies that have been conducted by other researchers. The conclusion section will consist of an examination of all the research prior to this section to...

    Read More

  • Political Environment in International Marketing

    1398 Words  | 3 Pages

    THE POLITICAL ENVIRONMENT: The critical concern Political environment has a very important impact on every business operation no matter what its size, its area of operation. Whether the company is domestic, national, international, large or small political factors of the country it is located in will have an impact on it. And the most crucial & unavoidable realities of international business are that both host and home governments are integral partners. Reflected in its policies and attitudes toward business are a governments idea of how best to promote the national interest, considering its own resources and political philosophy. A government control's and restricts a company's activities by encouraging and offering support or by discouraging and banning or restricting its activities depending on the government. Here steps in international law. International law recognizes the right of nations to grant or withhold permission to do business within its political boundaries and control its citizens when it comes to conducting business. Thus, political environment of countries is a critical concern for the international marketer and he should examine the salient features of political features of global markets they plan to enter. THE SOVEREIGNITY OF NATIONS From the international laws point of view a sovereign state is independent and free from external control; enjoys full legal equality; governs its own territory; selects its own political, social, economic systems; and has the power to enter into agreements with other nations. It is extension of national laws beyond a country's borders that much of the conflict in international business arises. Nations can and do abridge s...

    Read More

  • History of Multinational Corporations

    2012 Words  | 5 Pages

    However the modern MNC, as it is known today, did not appear until the 19th century. These new entities provide a new level of inter-firm connectedness, a wider division of labor, and a higher level of product integration across countries in which MNCs are growing. Studies have shown that modern MNCs are characterized by a high degree of complexity, and have not followed a linear pattern in their development. In addition, it is crucial to understand the geographical context in which these MNCs were founded. This paper will analyze the development of the multinational corporation (MNC) from the 1870s to the modern day and examine in what ways, and to what degree, it has changed over time.

    Read More

  • Globalization and State Sovereignty

    1784 Words  | 4 Pages

    Brinkman, June E., and Richard L. Brinkman. "Corporate Power and the Globalization Process." International journal of social economics 29.9/10 (2002): 730-52. Print.

    Read More

  • Management Problems Facing Multinational Corporations

    1385 Words  | 3 Pages

    Nowadays, business is set in a global environment. Companies not only regard their locations or primary market bases, but also consider the rest of the world. In this context, more and more companies start to run multinational business in various parts of the world. In this essay, companies which run multinational business are to be characterized as ‘multinational companies'. By following the globalization campaign, multinational companies' supply chains can be enriched, high costs work force can be transformed and potential markets can be expanded. Consequentially, competitive advantages of companies can be strengthened in a global market. Otherwise, some problems are met in the changed environments in foreign countries at the same time. The changed environments can be divided into four main aspects, namely, cultural environment, legal environment, economic environment and political system problems. All the changed environments make problems to multinational companies. In particular, problems which are caused by changed culture environment are the most serious aspect of running a multinational business. This essay will discuss these problems and give some suggestions to solve them.

    Read More

  • Globalization and Technology

    1460 Words  | 3 Pages

    Stonehouse, G., Campbell, D., Hamill, J. & Purdie, T. (2004). Global and Transnational Business (2nd ed.). Chichester: John Wiley & Sons.

    Read More

More about Multinational Corporations (Mncs) In The Global Economy

Open Document